Wednesday, February 29, 2012

When I first heard that Rick Santorum said he wanted to "throw up" when he read then-candidate JFK's famous religion speech, I had an admittedly churlish reaction of the sort I can only publish on a blog that bears my own name and in no way implicates anyone else with better judgment: Well, that makes sense, I thought. If you're Rick Santorum, getting people to associate your name with vomit would actually be a step up from the Google bomb.

But I digress. So anyway, what made Senator Santorum want to throw up? It was Kennedy's endorsement of an "absolute" separation of church and state. And I thought: Oh come on. Kennedy can't have said he endorsed an absolute separation of church and state. Nobody endorses an absolute anything. But then I looked it up and sure enough, Santorum was right. Here's what JFK said: "I believe in an America where the separation of church and state is absolute." And that's not all. The speech goes on to say that no church or church school should be granted government funds (apparently not even if such funds are also granted to secular institutions for the same functions) and goes still further to imply that as President, Kennedy would be guided by his conscience, completely independently of what the Catholic Church teaches. It's a very forceful speech, one worth reading--or better yet, listening to.

If one takes Kennedy at his word, it is hard not to agree with Santorum. Of course the separation of church and state should not be absolute in the literal sense. Certainly the Post Office can deliver mail to religious institutions; if a church, synagogue or mosque catches on fire, surely the government fire department can put it out; yet these activities effectively grant public funds to religion.

Likewise, it seems neither fair nor desirable to ask that people who connect their understanding of right moral conduct to some faith tradition wholly ignore that tradition in making decisions of public policy. The anti-slavery movement and the civil rights movements were filled with people whose consciences were informed by religious teachings. Of course it was possible to support the goals of those movements without religion. Many people did and do. But Santorum and others have a point when they note that for some people of faith it is artificial to demand that they try to separate their own motivating moral reasons entirely from their religious values. It is fair to demand that there be secular justifications for the laws they support, but not necessarily fair to demand that their own reasons for supporting such laws be entirely separable from religious values.

Having said that, I should quickly add I do not read Kennedy to be making the very strong demand that Santorum attributes to him. Here is what strikes me as Kennedy's crucial passage on this point:

Whatever issue may come before me as president — on birth control, divorce, censorship, gambling or any other subject — I will make my decision in accordance with these views, in accordance with what my conscience tells me to be the national interest, and without regard to outside religious pressures or dictates. And no power or threat of punishment could cause me to decide otherwise.

I do not read Kennedy to be saying that his views ("these views") were formed without any regard to what he was taught as a Catholic but simply that when he deliberates about the public good as President, he will not consciously give any weight to the views of the Catholic Church simply in virtue of the fact that they are the views of the Catholic Church. That principle -- a fairly modest version of what is sometimes called a requirement of "public reason" -- strikes me as quite defensible. Indeed, if Santorum means to repudiate that, he should be questioned about his views vigorously. Does Santorum think that the views of the Catholic Church (or for Romney, the Mormon Church, or for Obama, Protestantism) should carry weight as such in policy decisions?

In the end, it looks like Santorum is at best half-right in his critique of Kennedy's religion speech. The version of separationism that Kennedy endorsed is unrealistically strict. But Santorum is ultimately going after a straw man because Kennedy didn't really mean to endorse absolute separation. For example, Kennedy's inaugural address repeatedly invoked God. Meanwhile, the Supreme Court decided two important cases limiting organized public school prayer during the Kennedy Administration: Abington v. Schempp and Engel v. Vitale. In neither case did the Administration file an amicus brief advocating any position, much less one of "absolute" separation. And of course we know that in other respects, the Kennedy Administration did not pursue anything like absolute separation. Chaplains continued to serve in the military; the Post Office delivered mail to churches; etc.

So, in answer to the question that titles this post, what did candidate JFK mean by "absolute" separation of church and state? I think it is best understood in context to mean simply that government officials should not take orders from religious institutions -- which, after all, was the concern that had been raised about JFK in light of the hierarchical nature of the Catholic Church (and anti-Catholic bias). Senator Santorum is entitled to say that this makes him want to throw up, but in doing so, it strikes me that he exposes himself as:1) Dishonest in reading JFK's speech out of context;2) Dangerous in rejecting "absolute" separation of church and state in favor of no separation of church and state; or perhaps most charitably,3) Engaging in the same sort of rhetorical excess that JFK was engaged in.

Tuesday, February 28, 2012

I am currently in Hong Kong (in the airport, actually, waiting for a flight to Australia), where I participated in two tax scholarship-related events at the University of Hong Kong over the past few days. On Saturday, I was a commentator at the Taxation Law Research Programme's Third International Conference: "The European Union and Greater China: Understanding the Fundamentals of the New Taxation Relationship," an event that brought scholars from the Vienna University of Business and Economics to Hong Kong, to discuss tax issues related to trade between Europe and China. Yesterday, I delivered a lecture entitled: "Will the United States Government Ever Again Have a Functioning Budgetary System?" Both events were organized by Professor Richard Cullen and his colleagues, Dr. Xu Yan, Professor Wilson Chow, and Professor Andrew Halkyard. Everything was handled magnificently, and I have thoroughly enjoyed my first trip to Asia.

At my lecture yesterday, I spoke about the current political difficulties that have turned the U.S. government's budget process into such a mess. I spoke a bit about the debt ceiling impasse last summer, but I emphasized that the mess is merely worsened by the debt ceiling statute, because the anti-government ideologues are simply using the debt ceiling opportunistically to force spending cuts. If there were no debt ceiling (or if, as Professor Dorf and I argue he should, the President were willing to continue to issue debt in the face of a within-fiscal-year debt ceiling crisis), the same people could still threaten to shut down the government as part of the annual budget and appropriations process. The politics have become impossible, and my bottom line was that the politics will continue to be impossible until the economy improves, which would reduce the fear-based political support for those who wish to undermine the modern state.

Of course, the impossible politics of budgeting also make it less likely that the economy will improve, at least lengthening the already-slow recovery, and at worst preventing a recovery from ever fully taking hold. If we could run larger deficits in the short run, I argued, we would be better off in both the short run and the long run. But we cannot run larger deficits in the short run, because ... Well, you see where this is going.

In addition to my formal talk yesterday, I gave a short version of my talk over dinner on Sunday evening, at the request of some scholars who would not be able to attend on Monday. Interestingly, at both the Sunday dinner and at the Monday lecture, different listeners asked almost exactly the same three-word question: "What about Greece?" Neither questioner was evidently hostile, instead asking the question out of genuine confusion that I could argue that deficits are not horrible.

By coincidence, Paul Krugman's Monday op-ed in The New York Times dealt in part with this very question. What Krugman calls "the German story" is a bogus explanation for Europe's deepening economic problems (problems that might be leading the Continent -- and the world -- back into recession). The German story blames it all on fiscal irresponsibility by the governments of some of Europe's smaller and weaker economies (especially Greece, Spain, Italy, Ireland, and Portugal). As Krugman points out (and has pointed out many times before), only Greece's situation actually fits this narrative. Spain and Ireland were running surpluses before the Global Financial Crisis hit in 2008, Portugal's budget was clearly under control, and Italy's deficit was not much larger than Germany's (and was problematic only due to the hangover of bad decisions from years ago, which had since been reversed).

Because these facts are easily available (though only known, apparently, by a few of us), I answered my two questioners by pointing out that Greece is the exception, not the rule. The situation there is truly scary, but even Greece could be in much better shape if it were still issuing its own currency and could devalue it, thus avoiding the austerity that the German-led EU is forcing on the Greeks. The answer to having driven off a cliff is often not to try to drive back up the side of the cliff.

Even so, I was fascinated that two listeners independently brought up Greece as if it were a counter-point to my argument, which is that the U.S. would be better off if it ran a truly stimulative fiscal policy right now (accompanied by long-term efforts to bring down the growth of health care costs). One of those listeners is a tax scholar from central Europe. The other is a banker from the U.S. These are savvy and generally well-informed listeners, who clearly are NOT motivated by Newt Gingrich's belief that the U.S. government cannot do anything right.

This is the power of a narrative. Smart people filter information through the dominant narrative, notwithstanding how weak is the evidence to support that narrative. The narrative also wastes everyone's time, because it requires people to digress and seem to give ground, saying, "Yes, it is possible to do too much deficit spending, at which point we would have a true crisis." But good medicine can become harmful, too, if a patient overdoses; yet that does not make us respond to every medical prescription by saying, first and last: "What about addiction?" We can always be aware that there are upper limits to deficit spending (or any other useful medicine), but that is not a reason to ask about Greece every time we talk about deficits.

It is especially interesting, in fact, that the U.S. debt situation is so far away from not only Greece's, but from anything resembling an incipient crisis. Japan continues to carry a national debt equal to more than 200% of its GDP, while our debt -- even after four years of crisis-induced super-normal deficits -- still sits below 70% of our GDP. We are actually below both Germany and the U.K., with Britain's commitment to austerity having exactly the result that Keynesian economists predicted (slowing growth, high unemployment, and continued recession-induced deficits).

Cautionary tales are often useful. The urge to talk about Greece every time deficits are discussed, however, shows that the exception is causing people to misunderstand the rule.

Monday, February 27, 2012

My latest Verdict column previews the issues in Fisher v. University of Texas, the affirmative action case the Supreme Court added to its docket last week. After tracing the historical interaction of the Court's doctrine and the responses by the University of Texas, I conclude by explaining how both liberals and conservatives each only pay lip service to colorblindness. Here I want to delve a little deeper into one aspect of the case that could prove decisive before connecting it up with a theme I explore in the column.

The question is what to make of the "critical mass" argument at work in Fisher. Recall that in Grutter v. Bollinger, the majority opinion credited the University of Michigan Law School's interest in obtaining not just token representation of underrepresented minorities but a "critical mass," i.e., enough such students that no one feels isolated or like he or she is a spokesperson for the group. In my blog post last week, I noted that the dissenters in Grutter didn't necessarily reject the critical mass concept per se, but scrutinized the record to cast doubt on the claim that the University of Michigan Law School was actually pursuing this goal. I quoted the following language from the late Chief Justice Rehnquist's dissent:

From 1995 through 2000, the Law School admitted between 1,130 and 1,310 students. Of those, between 13 and 19 were Native American, between 91 and 108 were African-Americans, and between 47 and 56 were Hispanic. If the Law School is admitting between 91 and 108 African-Americans in order to achieve “critical mass,” thereby preventing African-American students from feeling “isolated or like spokespersons for their race,” one would think that a number of the same order of magnitude would be necessary to accomplish the same purpose for Hispanics and Native Americans.

I said in last week's blog post that Rehnquist "had a point," and indeed he does, but I have been thinking that perhaps the point is not all that devastating. The inference that Rehnquist draws from these numbers is that Michigan Law School didn't really care about critical mass at all, but was instead using the critical mass concept as a cover for its policy of racial balancing--i.e., its effort to make the proportion of members of various groups in the admitted class roughly match their proportion in the general population.

On the face of things, it's now not obvious to me that the numbers establish that MLS was aiming at racial balancing for its own sake rather than critical mass. Here's another explanation: The law school sought a critical mass of all groups, but this was easiest to achieve for African American students and hardest to achieve for Native American students, because there were so many more African American applicants. In this view, MLS would have admitted many more Native American students, but with a very small pool, there simply were not enough qualified Native American applicants to admit a critical mass of them. Thus, MLS had to balance its goal of admitting a critical mass of each group against the limits of qualified applicants in the pool.

Is that the real explanation? I don't know. Clearly educational institutions don't value critical mass over everything else. Moreover, I suspect that critical mass could vary based on the group. Let me explain with a thought experiment.

Suppose that the University of Michigan enrolls about a dozen Canadian undergraduates each year. I tried to find the actual number of Canadian students attending UM but without success. The UM does have a webpage for Canadian students, suggesting it's more than a handful, which would make sense given the proximity of Michigan to Ontario. In any event, the actual numbers are not important. Let's suppose that UM has some Canadian students but fewer than it would regard as a critical mass of African American students. Let's also suppose that UM could increase the number of its Canadian students through a combination of more aggressive recruiting in Canada and affirmative action for Canadians. Does UM's failure to take such steps undermine its claim that it seeks a critical mass of African Americans?

I don't think so. Why not? Because there is no (or very little) tendency of Americans to stereotype or isolate Canadians or to make them feel like spokespersons for Canada. In other words, critical mass is less important for Canadians than for African Americans.

If that's right, then it's a double-edged sword. On the one hand, we now have another explanation for how the critical mass idea could be valid, even though admissions officers don't apply it uniformly across groups. On the other hand, it now looks like critical mass is tied in some non-accidental way to history of discrimination and stereotyping. So critical mass could be seen as serving a kind of remedial purpose. That's potentially a problem because the SCOTUS precedents define the acceptable scope of remedial affirmative action quite narrowly. To be sure, I disagree with the relevant precedents, and would entertain a broader conception of remedial purpose, but that's an argument for another day.

Thursday, February 23, 2012

Most of the coverage I have seen of the imbroglio over the scope of the religious exception to the contraception insurance mandate has focused on the conflict between interests in health care and religious interests in avoiding contributing money to support acts that individuals and institutions deem immoral. Fair enough. That is indeed the core question. But there is another, more mundane, aspect to the controversy that has me puzzled.

My puzzlement concerns the economic assumptions behind the compromise policy that President Obama has now settled upon. Under this compromise, religiously-affiliated institutions (like Catholic hospitals) that object to paying for employee insurance policies that include contraception coverage will not be required to contribute to the cost of such contraception coverage, but the employees will still be eligible for such coverage from the insurers themselves. According to the White House, insurers will want to cover contraception because doing so saves money in the long run: The costs of health-care for an unintended pregnancy run into the tens of thousands of dollars in obstetrical bills and baby care (assuming that the insured switches to family coverage post-birth), whereas the costs of contraception are much lower.

We can put aside the cost of providing abortions, which are lower than the costs of prenatal care, but which do not figure into the health insurer's calculus because private health insurers are not required to provide abortions. Any employer with a moral objection to providing employees with health insurance options covering contraception will also have a moral objection to providing health insurance covering abortion. Thus, for the insurance company, providing contraception coverage for free is cost-effective if it saves money over prenatal and baby care.

So now we have the following question: Wouldn't any well-run health insurance company offer contraception coverage without a government mandate to do so? Assuming that the underlying economic assumptions are correct, I think the answer to this question has to be yes. And that in turn leads to a further question: So why does the government need to mandate contraception coverage for anyone? I can think of three possibilities.

1) Perhaps many health insurance companies are simply badly run. Some health insurers cover part of the cost of a gym membership for their insureds on the theory that people who exercise regularly have better overall health than people who do not, and therefore covering gym memberships at the front end will lead to lower back-end costs for things like bypass surgery and diabetes care. And yet some but not all health insurance plans cover gym memberships. One could imagine that the economics here are complicated, so that perhaps it's not entirely clear whether it saves the insurer money to cover gym memberships, but if the economic benefits are clear--as the Administration contends they are with respect to contraception versus prenatal + baby care--then a deliberate failure to cover gym memberships--or contraception--would appear to reflect poor administration of the insurance company. We shouldn't rule that out. Insurance companies' coverage decisions are influenced by a great many irrelevant or even perverse factors (including erroneous but persistent conventional wisdom among medical professionals as well as simple inertia), so it's possible that health insurers need to be mandated to do something that will save them money.

2) Another possibility, however, is that insurance companies that do not cover contraception are making decisions based on pressure from employers that don't want to see such coverage. If that's the case here, then the Obama compromise would be better understood as telling the religiously affiliated employers not to block contraception coverage that the insurers really want to provide for free, rather than as telling the religiously affiliated employers to offer plans that cover contraception coverage.

3) Finally, it's possible that the Administration has its numbers wrong. Perhaps the cost of providing contraception coverage is greater than the cost of providing prenatal (and postnatal) care for the women who become unintentionally pregnant (and their fetuses, then babies).

Wednesday, February 22, 2012

In my latest Verdict column, I use President Obama's recently expressed willingness to have SuperPACs support his re-election as an occasion to discuss the campaign finance mess and whether anything can be done about it. I note that among people who think about the issue, public financing is the gold standard but that American politics will generally preclude the sort of generous public financing that would neutralize SuperPAC spending. I then suggest that the federal government might consider attaching conditions to licenses for wireless carriage requiring free airtime for candidates for office. Intrigued? Go read the column.

Now onto a related question: Why is running for office so expensive? For years, we have been hearing about how the growth of the Internet means that it is now easier than ever to get a message out into the world. It's also supposed to be cheaper. That's why the shift from print to Internet has been so disastrous for newspapers: Print advertising is much more expensive per eyeball than is internet advertising, so moving readers from print to online cuts into ad revenues. And yet, despite these developments, there is more money than ever going into political campaigns. What gives?

Here are a few related thoughts:

1) We may be in a world of media transition but it's a long transition. Mitt Romney's "death star" SuperPAC spends a lot of dough buying airtime. Some of this may be demographics. Old media are still a good way to reach old(er) people, who tend to vote, especially in Republican primaries.

2) There's also an attention issue. Internet ads tend to require more active participation by viewers. Political junkies might click on a SuperPAC ad about how Rick Santorum or Newt Gingrich is not really a conservative, but many people, including many primary voters, won't. Old media get political advertisements to their audience, even if it's a captive audience. To be sure, the audience could fast forward through the ads if watching on a DVR, but that brings us back to point 1). Much of the target audience probably just sits passively and watches.

3) Some big chunk of the money goes for making rather than placing ads. Sure, if you're Mike Gravel or Herman Cain, you can make a low-budget offbeat ad, release it on YouTube, and watch it go viral. However, having hundreds of thousands of people emailing each other links to your ad with the Subject line "WTF?" is not exactly a winning strategy, as you can verify by asking President Gravel or President Cain how it worked out.

4) In addition to spending a chunk of change to produce and place ads, modern campaigns cost a lot of money for other things: flying the candidate, his or her entourage, and surrogates around, paying for their hotel rooms, paying non-volunteer staff for putting up signs, get-out-the-vote operations, etc. Note that the high cost of these sorts of expenses is probably good for democracy. Why? Because most of these are items that the candidate's own campaign has to control and therefore cannot be funded by uncoordinated expenditures from SuperPACs. That, in turn, means that the hard money caps can actually do some work.

So, my bottom line: At some point in the future, if advertising costs really do come down (or if Congress passes the statute I propose in my Verdict column), existing campaign finance legislation could work. Of course, by then, President Santorum's Supreme Court appointees may have overruled the portion of Buckley v. Valeothat permits regulation of campaign donations, so it might be too late!

Tuesday, February 21, 2012

Today the SCOTUS granted certiorari in Fisher v. University of Texas, which poses the following main questions:

1) Whether the bump that UT gives in admissions to minority candidates in order to maintain a "critical mass" in particular fields survives scrutiny under Grutter v. Bollinger;

and

2) If so, whether Grutter v. Bollinger ought to be overruled.

In addition, there is a threshold question of whether the plaintiff has standing (or the case is moot) in light of the fact that after she lost in the lower courts she enrolled in LSU, from which she has now graduated. Herewith, a few very quick reactions.

A) I strongly suspect the Court will reach the merits. Given the glacial pace of litigation, it will not be that unusual for a challenge to university admissions to remain in the courts even after the original plaintiff has graduated. Thus, one can readily envision the majority invoking the capable-of-repetition-yet-evading-review exception to mootness. We know that at least four Justices voted for cert notwithstanding the potential standing/mootness objection, which was clearly argued as a reason for denying cert.

B) The case could make new law notwithstanding the fact that Justice Kagan is recused if Justice Kennedy joins the conservatives to form a five-Justice majority for overruling Grutter. Although I think the odds are substantial that there will be five votes to reverse in the particular case and rule for the plaintiff, I think it unlikely that the Court would take this opportunity to overrule Grutter. Justice Kennedy pretty much accepted Grutter in the Parents Involved case.

C) But to say that Justice Kennedy accepts Grutter is not to say that he will apply it the way that we might have expected Justice O'Connor to apply the case. Both Justice Kennedy's own Grutter dissent and the Grutter dissent by CJ Rehnquist that Justice Kennedy joined expressed grave skepticism of the claim that the University of Michigan Law School was actually seeking a critical mass. And they had a point. Here is the late Chief Justice's core analysis with regard to critical mass:

From 1995 through 2000, the Law School admitted between 1,130 and 1,310 students. Of those, between 13 and 19 were Native American, between 91 and 108 were African-Americans, and between 47 and 56 were Hispanic. If the Law School is admitting between 91 and 108 African-Americans in order to achieve “critical mass,” thereby preventing African-American students from feeling “isolated or like spokespersons for their race,” one would think that a number of the same order of magnitude would be necessary to accomplish the same purpose for Hispanics and Native Americans.

The actual admissions numbers, CJ Rehnquist (joined by Justice Kennedy) concluded, reflected impermissible "racial balancing." I would not be surprised if Justice Kennedy were to parse the record carefully to find evidence that the University of Texas likewise is using critical mass as a cover for racial balancing.

D) The case will be argued next Term, probably in October, possibly in November. Either way, it will thus make affirmative action highly salient right during the peak of the general election campaign. The Obama Administration will be under pressure to file a brief, but even if the SG does not file, we can expect the Republican nominee to use the case to drum up support among white middle and working-class voters, who tend to strongly dislike race-based affirmative action. So the timing of the cert grant is especially good for the eventual Republican nominee and perhaps for Republican candidates more generally.

Finally, don't blame the messenger! From my perspective, the foregoing is all pretty dispiriting. I'm just calling it as I see it, rather than spinning.

Monday, February 20, 2012

As most of our readers know, and as a perhaps larger proportion of them than that of the nation at large, thanks to Neil, likely have known since at least 2007, sagging mortgage markets continue to act as a drag on our still underperforming economy. The White House and Congress were perhaps not as quick to catch on as we might have wished, though admittedly there have been several efforts, commencing with HAMP and HARP, to turn things around over the past several years. To the surprise of many in Washington, however, initiatives thus far attempted have yielded but modest results. (Let us hope that the latest refinancing initiative, along with future such initiatives applicable to Fannie- and Freddie-held mortgages, will fare better.)

One factor that might account at least partly for the less than stellar successes of mortgage market repair efforts thus far attempted is their 'one size fits [nearly] all' character. For as it happens, different subsectors of the mortgage sector face quite distinct challenges. This is one tentative conclusion that Dan Alpert, Nouriel Roubini and I reach in our recent white paper, The Way Forward, about which Neil kindly wrote at this site late this past autumn - . If we are right about this, then disaggregating mortgage market repair efforts along lines more or less isomorphic to the 'subsectoral' divisions to which I refer should improve their performances. In this post I wish to draw attention to one such subsector, and to a program that's well adapted to its distinct challenge.

It will be well here first briefly to elaborate on the full set of 'subsectors' to which I refer.

So, it should probably first be admitted that some (doubtless comparatively few, but nevertheless plenty of) mortgagors really are mortgagors simply in owing to the unusual circumstances that prevailed during the residential real estate bubble of the late 1990s and early 2000s. Under normal conditions, these folk would likely have been renters, and so it might be the case that only conversions of present mortgages to 'rent with a view possibly to owning' arrangements will serve best to spare them foreclosure at present. The idea here would be to face certain evident facts about some mortgagors' capacity to own under non-bubble conditions, without for all that falling too quickly for the 'baby out with the bathwater' line taken by many who mistake the crisis for 'proof' that the American fixation on home-owning tout court is ill-conceived. A plan along these 'rent to own' lines is sketched for this subsector in the aforementioned Way Forward.

Other (surely the great majority) of troubled mortgagors likely would have been mortgagors not only under bubble conditions, but also under more longterm trendline conditions of the sort that prevailed prior to the bubble years before the crash, but now find their mortgages 'under water' in owing to the fixed rates of their debts as compared to the variable rates - which last 'varied' downward from 2007 onward - of their residential assets. For many of these mortgagors, conditional principal write-downs accompanied by potential-appreciation-sharing agreements and bank capital-regulatory forbearance arrangements might well ultimately prove necessary. Here too a detailed plan along the requisite lines is mapped in The Way Forward.

Yet another subclass of mortgagors, however, seems to have been overlooked in comparison to those two just mentioned (though The Way Forward aims to give them their due too). These are mortgagors, some of whose mortgages might be under water but many of whose might not, who are experiencing only temporary difficulty keeping current on their monthly payments owing to slump-induced un- or underemployment. Because only 60 days' delinquency are needed for many mortgages to go into default and foreclosure, people in this subclass face the prospect of losing their homes, both to their own detriment and to that of their lenders and neighbors and markets more generally, notwithstanding the fact that they will surely be able to resume payments within a mere matter of months. And owing to rigidities in many (especially securitized) mortgage contracts, even widely recognized would-be value-maximizing temporary forbearance in such cases is often foreclosed (sorry, pun intended).

In the face of this class of avoidable tragedy, my friend and colleague Michael Campbell and I have drafted a bill that we now have reason to hope and believe (a) will soon be enacted into law here in New York, and (b) might serve as a template for similar provisions both in other states and even at the federal level. It is called the Home Mortgage Bridge Loan Assistance Act of 2012 (HMBLAA), and has already received the endorsement of the New York City Bar Association, to whose Committee on Banking Law we both belong (Michael is the Chair), the New York State Bar Association, and now the New York Bankers Association. (A link to the draft bill, along with a white paper more fully explaining it, is below.)

It is not altogether surprising that our proposal has garnered so much support. In a sense, it is one of those proverbial 'money on the table' opportunities. The program sidesteps an obvious market failure, and does so by means that are rather more orthodox than would be entailed by another partial solution to the mortgage crisis I've proposed here at DoL before. In so doing, it benefits lenders and borrowers alike, not to mention neighborhoods, the housing stock, the mortgage markets and thereby the macro-economy. Yet it costs the state next to nothing since the bridge loan assitance that it provides is repaid in full. Such is the lesson, at any rate, offered by an early rendition of a similar program pioneered in Pennsylvania during the imports-induced steel slump and Reagan recession of the early 1980s - viz. the Home Emergency Mortgage Assistance Program (aka 'HEMAP'). HMBLAA builds upon the lessons learned from the 30-year HEMAP experience, and offers CRA credits to banking institutions that assist with provision of seed moneys to jump-start the program. Once up and running, HMBLAA should be financed nearly in full by bridge loan repayments made by the beneficiaries themselves.

We have received a good deal of constructive criticism and suggestion from attorneys and bankers in the private, as well as the public sector, but could still do with more. I accordingly link to the draft bill, as well as to a white paper we've written in support of it, complete with regulatory impact analysis supplied by colleagues at the New York Fed where I moonlight most Fridays and weekends, here:

Sunday, February 19, 2012

Justice Sotomayor is known for being outgoing and friendly, down-to-earth and approachable.

Even so, it’s not so often that people just walk up to her on the street and ask her to resolve their disputes.

Unless she’s on Sesame Street, that is.

Yes, a couple of weeks ago, preschoolers across America were treated to a guest appearance by none other than the Justice herself, as she sat down to have coffee and chat for a while in Spanish with Maria, a long time “Street” resident. As one of my Facebook friends commented (raising an “Amen” from another), when we were kids in the 1970s and we envisioned a more inclusive America, this is what we imagined.

Now, even though the defendant in the case thought that Justice Sotomayor was “the perfect judge to hear [her] case,” the case before the Justice was one that almost certainly would not have made its way to the Supreme Court. After all, it involved the question of whether Goldilocks should have to fix Baby Bear’s chair after she broke it during her unauthorized entry into the Bear family home. But it resonated on all kinds of levels for the under-four set – from the basic (Shouldn’t we have to fix things if we break them? Shouldn’t people and Muppets and fairy tale characters work together and compromise if they have a disagreement? And shouldn’t every girl carry a bottle of glue in her basket, just in case?) to the more sophisticated (Why do we have rules? What is “justice”? Why do we sometimes need neutral arbiters to help us resolve our disputes?).

Given that most Americans can’t name even one of the nine Justices or any case decided by the United States Supreme Court, Justice Sotomayor engaged in a remarkable public service by appearing on the iconic kids’ program. She educated kids and parents alike about what Justices do and why their jobs are important. She oozed intelligence and calm, demonstrating that judges don’t just bang their gavels and act important. She showed people that Justices are regular people who wear ordinary clothes, who hang out with their friends and speak different languages with different accents. And she smiled as she helped each litigant understand the other’s point of view, conveying a message that judges are not scary and intimidating, but thinking, feeling humans who “listen to both sides of the case” (in Sotomayor’s words, that is).

Sure, Justice Sotomayor did have her super-hero-ish moments (as yet another Facebook friend observed), as with her near-instantaneous ability to get her robe on and her lightning-speed decision. And, as Mike emailed me last week, acting wasn’t at the top of her skill set. But, by appearing on Sesame Street, she demonstrated to parents and kids alike that the justice system is accessible and relevant to all, even when the problem is a mundane one, or, as I quoted one final friend in a 2008 article, one that pits property rights against the health and safety of a little girl.

Friday, February 17, 2012

Since the beginning of the financial crisis, and continuing into the Great Recession and its never-ending aftermath, Paul Krugman has been beside himself about the dishonesty and outright hackery of many of his colleagues in the economics profession. In my Verdict column today, I offer explanations both for the phenomenon that Krugman describes, and for Krugman's inability to process the idea that his colleagues are so blatantly intellectually dishonest. My bottom line boils down to this: Of course many economists are being clueless or worse, because they are selected and trained for a completely different set of skills, and there are no incentives to force them to be non-ridiculous.

Using cost-benefit analysis to explain why economists as a group are so useless does, of course, carry some irony. More importantly, however, the better economists really cannot see how their colleagues turned out the way they did, because (I think) they imagine that their training is what makes them useful as economists. The reality is that Krugman's ability to analyze the economy so well requires a skill set that goes far beyond what he learned in grad school. Moreover, that skill set makes it possible for Krugman (and some others) to overcome or avoid the traps that modern economics training sets for the unwary and the credulous.

Take my favorite example, so-called Ricardian Equivalence. When I was starting graduate school in the early 1980's, this theory was all the rage. It was the macroeconomic implication of the hyper-rational-actor theories that had been bubbling up for several years, claiming that people could and would engage in self-interested decisions that would perfectly neutralize changes in government spending and tax policies. If the government did something that implied that taxes would go up in the future, then people would save now to be able to pay those taxes in the future, which would reduce spending today by exactly as much as the policy was intended to increase spending.

To make the argument less arcane, here is what a person would be thinking: "I heard that the government is going to spend $400 billion this year to pump up the economy. Sometime, I don't know when, I or my heirs will have to pay my share of that $400 billion, plus interest. Therefore, I'll put my share of that $400 billion in the bank now, earning interest, to withdraw when needed (or to bequeath to my children, if it is not needed during my lifetime)."

Every non-economist who has ever heard that idea has said, in essence: "What a load of crap!" Many economists did, too. The economists, however, were intrigued by all of the ways in which the theory was ridiculous. How would a person know her share of the total? How do variations in borrowing costs among people (and relative to the government's borrowing costs) change the analysis? What if a person has no children? And on and on, with many dissertations and peer-reviewed publications dedicated to the topic.

Notably, there is no as-if story here, nothing that would allow economists to think that this reasoning is somehow being carried out at a subconscious level in people's minds. If people are not thinking as the theory claims they do, then the theory does not work. So what do people like Krugman do? They think creatively about the idea, see if there are any good insights to be learned from all of the ways in which the idea is absurd, and then move on. The very act of doing so, however, empowers those who wish to push the profession's research agenda in the direction of more such ridiculous theorizing.

I recall having a conversation with a fellow graduate student at the time, who insisted that people really do act in this hyper-rational way. When I suggested that he might want to get out more, he told me that economists do not need to look at the world, because our theories already take human self-interest into account. (Actually, he delivered that message much less politely, but that was the content of his insult.) He is now, by the way, on the faculty of a top-20-ranked economics department.

By the late 1980's, another hyper-rational-actor theory had become de rigueur among top-flight economists: Real Business Cycle Theory (RBC). RBC essentially said (and I admit that I am simplifying here, but not in a way that changes the bottom line) that the economy's booms and busts are all responses to underlying changes in preferences and technology. If the economy weakens, with higher measured unemployment, it is not that there is excess supply of labor (because markets are always in equilibrium, with no excess demand or excess supply). It is that people must have chosen not to work, for some rational reason.

Again, good economists ridiculed this idea, pointing out that one implication of RBC is that the Great Depression was a group decision by millions of people worldwide to take a decade-long vacation. Again, however, the professional agenda moved forward, with top jobs going to people who could put bells and whistles onto RBC models. I once spoke with a guy at a top-1o department about a paper that he had written using an RBC approach. I did not know him well, but I had reason to think that he was not insane. I thus asked if his paper was designed to expose the ridiculousness of RBC models, by showing some absurd implications of the theory. He looked aghast, and said that I had it completely wrong. He believed that the theory was both sensible and descriptive of the real world. Needless to say, the conversation ended soon thereafter.

Excellent economists like Krugman, therefore, see a world in which their colleagues frequently write and think about crazy theories. What they respect, however, is the technical virtuosity of those who spin those theories. Even the best economists have shown, by revealed preference, that they would rather deal with someone who can play with the latest models, using the most advanced technical methods (both mathematical theoretical modeling, and econometrics), than to change the profession to one in which one pays a price for living on a different planet.

Now, of course, the better economists are flummoxed by the tendency among their colleagues to ignore or ridicule the lessons of Keynes and his followers, in the face of a crisis that so obviously confirms the importance of those lessons. Yet the elevation of theorizing based on the kinds of things that fed Ricardian Equivalence and RBC models brought into the profession people who either do not think that those theories are crazy, or who are willing to suspend disbelief as a matter of career advancement. Once disbelief is suspended, far too many never emerge from the rabbit hole.

Finally, it is worth remembering that we are not just talking about theories that are crazy. These theories, and the methodological individualism that underlies them, are hard-wired to produce anti-Keynesian, politically conservative results. When Krugman is stumped by his colleagues' willingness to support Republican politicians, he shows that his own ability to look for the interesting aspects of cutting-edge theories has dulled his ability to see how those theories reinforce an agenda that is both immoral and destructive. It is to our benefit that the good guys can play the insiders' game in economics well enough to be taken seriously, yet still maintain their grip on reality. But the evidence shows that, for most people, it is exceedingly difficult to play with fire and not become consumed by the flames.

Thursday, February 16, 2012

The Obama Administration announced its budget proposal earlier this week, to the usual round of insults from the other side. Because the budget has no chance of passing in the Republican-controlled House, the proposal is rightly being analyzed as a political statement -- an opportunity for President Obama to clarify for voters the vast differences between his priorities and those of his opponents.

Here, I will take a moment to assess the broad message of the budget, before offering a few thoughts on the political impact that it might have. Finally, I will consider what this budget tells us about missed opportunities and political “realism.”

In its broadest terms, the new Obama budget represents a return to solidly Keynesian economics. There is no reliance on the Confidence Fairy, or any other stealthy moves to undermine the importance of government in directly trying to solve important problems. Deficit reduction is finally -- FINALLY! -- described as a long-term goal only, rather than the be-all and end-all of fiscal policy at all times. They are actually proposing spending increases to deal with ongoing joblessness. (I still await a statement from the administration that expressly describes long-term deficit challenges as being addressable only through serious health care cost containment, along with some progressive tax reform. But at least they are pushing the latter half of that combination.)

Moreover, those spending increases would come in the areas where we need it most education, infrastructure, science and basic research, environmental and energy innovations, and so on. They are not talking about my “growth budget” idea, but the elements are there. Our current situation is so dire that we do not need to “bury tubes of money,” in Keynes’s fanciful description of how wasteful endeavors can stimulate an economy. There are so many unmet real needs that we could put people back to work on projects with long-term payoffs.

Therefore, even though it would be completely sensible to engage immediately in some make-work programs that would end when the unemployment rate dropped back into the 4 to 5 percent range, we are now in a situation where the long-term trend in national debt to GDP can be brought down with spending that has short-term stimulative effects -- much of which should continue even when stimulus is no longer the point. (At that time, of course, the cost-benefit calculations would change, with government spending projects being approved only if they provided a long-term rate of return greater than competing private projects.)

Qualitatively, therefore, this is the kind of budget that one would want from a President -- and certainly from any President who allowed voters to believe that he represented forward-looking, progressive change. (I say “allowed voters to believe” as a way of acknowledging that Obama the candidate was relatively cagey about his possible liberalism. I personally think that he was pretty explicitly running as a liberal/progressive, making his subsequent right-centrism truly a betrayal. I understand, however, how others could view the evidence differently.)

Bottom line: Obama has proposed short-term stimulus, spent on projects with long-term payoffs, along with progressive tax changes. What could I possibly complain about?

Quantitatively, of course, there are serious concerns. Four years ago, a national group of civil engineers estimated that there was about two trillion dollars worth of infrastructure repair projects that had been deferred. In the time since then, with the inadequate 2009-10 federal stimulus money only partially offsetting state and local budget slashing, the problem has only gotten worse. Even so, the amounts being proposed in the Obama budget are in the range of $35 billion per year. Granted, one could never expect (even setting aside political constraints) to address all of these needs right away, but this is peanuts.

Moreover, the Administration continues to rely on private/public partnerships, especially the proposed “infrastructure bank.” That is a genuinely good (though limited) idea as a long-term financing mechanism for infrastructure repair and expansion, but is not a short-term solution to an unemployment rate that remains above 8 percent, more than three years after the economy began to melt down. Although the budget is Keynesian in kind, it is New Democrat in degree.

Which brings us to the politics. News reports indicate that last summer’s standoff over the debt ceiling finally turned around the Administration’s thinking about confronting the Republicans. Whatever else one might say about Obama’s strategy (or lack thereof), the Republicans definitely crashed and burned with their extremism.

Even an idealist like me understands that politicians should not overplay their hands. Just because Obama and the Democrats are benefiting from the public’s growing recognition that the Republicans offer no positive vision of government -- other than the vision that the Occupy movement so effectively ridiculed and decried -- that does not mean that they can now sound like FDR on steroids.

Would it be too much, however, to ask them to sound like Ford or Eisenhower? Even in the face of a continuing economic crisis, and even with the evidence that expansionary austerity does not work, must we still err so completely on the side of super-hyper caution -- especially when this is being viewed as an aspirational statement, and not something that might one day require Blue Dog Democrats actually to vote to rebuild the safety net?

Looking back over the last few years, the attacks by members of the Obama Administration on progressives -- whom his former press secretary said needed to be “drug tested,” because of our disappointment with him -- can best be viewed as an argument that we should be patient and wait until we reach precisely the point where we are today. That is, we were supposed to give Obama space to play the grown-up, without pushing things too far, to keep the middle of the country on board. When the Democrats controlled both Houses of Congress, that strategy was designed to prevent the voters from turning on the Democrats; and when the House turned Republican, that strategy was designed to make Obama seem the rational alternative.

At the time, many of us argued strongly that it was possible to achieve what Obama wanted without giving so much ground on policy. The Republicans were making it abundantly clear from election day 2008 onward that they were willing to destroy the country to take down Obama, so why should we be afraid of being more bold? Anyone who cared to notice who the extremists were could see it with their own eyes.

Having prevailed in that debate, the Administration could now point to the polls and say, “See, we told you this would work. The public is angry, but they are angriest at House Republicans.” The President can argue that his strategy built up a huge amount of political capital -- capital that might not have been available to a President who seemed too Keynesian in a Tea Party era.

While I continue to disagree with that view of history, I have to wonder what the point of political capital is if it is not to be spent. Obama’s budget represents a statement of principles and aspirations. If this is all we are willing to hope for, then it is difficult not to see the last three years as an even bigger waste than it already seemed to be.

Wednesday, February 15, 2012

In my column for this week, Part 2 of a two-part series in which I discuss and analyze the opinions in United States v. Jones, I elaborate on some of the differences between Justice Scalia's and Justice Alito's respective approaches to the Fourth Amendment implications of using a GPS device to monitor suspects' whereabouts. In this post, I want to focus on something else: judicial arrogance.

Justice Scalia has regularly accused various of his colleagues on the U.S. Supreme Court of a type of judicial arrogance. He suggests that they believe they know better than democratically elected representatives of the people and can therefore disregard the will of the majority of Americans and impose their own subjective vision of what the Constitution ought to (but does not in fact) mean. This criticism is in part a Separation of Powers objection, a claim that judges are not authorized to undo legislative action under the circumstances in a particular case and they therefore usurp the role of the elected branches of government when they do.

But the criticism is more than that -- it also implies that the Justices are guilty of a kind of elitism, under which they presume that they are better equipped to determine the best policies for Americans than are the people whom Americans have actually elected to do that job. In this scenario, Justice Scalia is the humble judge who understands and appreciates the proper limits of his own power and accordingly refrains from invalidating legislation in the absence of clear constitutional language or a straightforward original understanding that comes into conflict with the legislation. To do otherwise would be to indulge the illusion that Justices know best.

Justice Scalia's image of himself as a humble judge is flawed in a number of respects. First, his notion that he engages in an objective apolitical process while his colleagues impose their own values on the populace bears little relation to reality. Judging is inherently a value-laden and subjective process from which it is not possible to excise politics altogether. This does not mean that judges are incapable of error, of course -- just because there is more than one arguably right answer does not negate the fact that there are many and varied wrong answers.

Second, and perhaps more importantly, Justice Scalia picks and chooses when he will be "humble" (and leave legislation in place) and when he will be arrogant (and strike it down). He is sometimes wedded to the text and the original meaning of constitutional provisions, for example, in mocking the very idea that there might be a fundamental constitutional right to reproductive choice or to same-sex relationships. But he is at other times quite willing and even eager to overlook the text and original meaning, for example when he concludes that punishing racists for violent expression of their racial hatred violates the Free Speech clause of the First Amendment, or that government-supported affirmative action violates the Equal Protection Clause of the Fourteenth Amendment. And Justice Scalia's vote in Bush v. Gore ought perhaps to have put to rest permanently the claim that his approach to constitutional interpretation transcends politics.

Humility and arrogance, however, have broader meanings as well and refer to more than just how enthusiastically a judge engages in judicial review. Under this more common use of the words, Justice Scalia was famously reported to have said "What's a smart guy like me doing in a place like this?"

In United States v. Jones, Justice Scalia began his majority opinion with the following words: "We decide whether the attachment of a Global Positioning-System (GPS) tracking device to an individual’s vehicle, and subsequent use of that device to monitor the vehicle’s movements on public streets, constitutes a search or seizure within the meaning of the Fourth Amendment." One could understand this statement to mean that Jones is a case in which the Supreme Court is ruling on the Fourth Amendment implications of police tracking suspects with a GPS. On this interpretation, the statement is bland and uneventful. It simply introduces the topic.

But there is another way to read the statement, with an emphasis on the word "We." On this interpretation, "We decide" -- Justice Scalia looks out on the different ways in which judges, lawyers, academics, and lay people have understood the constitutional implications of GPS surveillance. And having done so, he announces that he and the other Justices in the majority will decide this controversial question: he is, in other words, about to deliver the truth.

Justice Jackson once said, referring to the Justices on the U.S. Supreme Court, that “[w]e are not ﬁnal because we are infallible, but we are infallible only because we are ﬁnal.” This statement reflects the knowledge that a Supreme Court Justice wields enormous power that does not correspond to his or her special capacity to divine the truth. When he is not self-consciously displaying judicial humility, Justice Scalia appears sometimes to forget the responsibility and potential for error that go hand in hand with power, even when the person exercising that power is Justice Antonin Scalia.

Tuesday, February 14, 2012

Right in time for Valentine’s Day, the Supreme Court of Pakistan has sent Prime Minister Yousaf Raza Gilani a love letter – in the form of charges for contempt of court. That handwriting had been on the wall for weeks now, but was sealed with a kiss on Friday, when a bench of the Court led by Chief Justice Iftikhar Muhammad Chaudhry denied Gilani’s appeal to dismiss the contempt notice served upon him last month. The appeal hearing itself appears to have been a stormy affair, with Chaudhry and other judges reportedly “almost shouting” at Gilani’s lawyer, Aitzaz Ahsan – who happened to serve as the Chief Justice’s own lawyer during the happier days of the lawyers’ movement back in 2007. “How can you being a senior lawyer write this?” snapped the Chief Justice. “We are very embarrassed by remarks [in your filing].” He apparently closed the hearing by simply saying, “Sorry, Aitzaz.” (With great warmth and affection, I am sure.) If Gilani is convicted of contempt, that almost certainly will disqualify him from serving in Parliament and, therefore, lead to his ouster as Prime Minister.

How did Pakistan find its way to this lovefest? At issue in the contempt case is the government’s unwillingness to fully implement the Court’s 2009 judgment invalidating the National Reconciliation Ordinance, an order promulgated in 2007 by then-President Gen. Pervez Musharraf granting amnesty to thousands of bureaucrats and politicians charged with corruption and other offenses in the years before Musharraf’s 1999 coup. The NRO was born out of a U.S.-brokered courtship between Musharraf and former Prime Minister Benazir Bhutto in 2007, when the lawyers’ movement was ascendant, Bhutto in self-imposed “exile,” and Musharraf’s own grip on power slipping away. (Geo TV’s romantic imagining of the Musharraf-Bhutto courtship can be seen here. Rest assured that the video is SFW; Musharraf does not take off his uniform.) Channeling its inner desi auntie, the Bush Administration was determined to play matchmaker, hoping that by arranging the political marriage of Bhutto to its loyal friend Musharraf, it could help Musharraf stay in power. But for Bhutto to be willing to return to Pakistan, she wanted Musharraf to drop corruption cases against her and her husband, Asif Ali Zardari, arising from her tenure as Prime Minister during the 1990s.

Needless to say, Bhutto’s leading rival, former Prime Minister Nawaz Sharif, felt rather jilted by these developments – since only the previous year he and Bhutto, along with the leaders of thirteen other civilian political parties, had signed and agreed to the Charter of Democracy, a preconstitutional declaration which explicitly pledged it signatories not to cut side deals with the military that might advance their own political fortunes but undermine democracy by sustaining the military’s political power. (My thoughts at the time about the Charter of Democracy and the Musharraf-Bhutto courtship can be found here and here.) And rather than raise Musharraf’s popularity, Bhutto’s own standing took a tumble. As it happened, the relationship between Musharraf and Bhutto fell apart, but the NRO became law anyway, granting amnesty to thousands of individuals, including Bhutto, Zardari, and other senior politicians in Bhutto’s Pakistan People’s Party.

Almost immediately, the Supreme Court suspended the NRO’s operation, and eventually – after an extended saga that, to refresh your recollections, included (1) Musharraf’s extraconstitutional state of “emergency”, during which he ousted two-thirds of Pakistan’s superior judiciary, cracked down on political opponents, and purported to amend Pakistan’s constitution to preserve his ability to serve as president, (2) Bhutto’s assassination and Zardari’s ascension to become co-chairman of the PPP, (3) elections in February 2008 which decisively repudiated Musharraf and brought a PPP-led government to power, (4) Musharraf’s resignation, and the ascension of Bhutto’s widower, Zardari, to the presidency, and (5) the new civilian government’s eventual (though fitful) restoration of the judges ousted by Musharraf in March 2009, following continued pressure from the lawyers’ movement and Sharif – eventually, after all of that, the restored Supreme Court issued a final judgment invalidating the NRO in December 2009. The government has dragged its heels on fully implementing that judgment, balking in particular at the Court’s order to write Swiss officials to reinstate an earlier request seeking assistance in pursuing corruption cases against Zardari under Swiss law – a letter that apparently had been withdrawn, owing to adoption of the NRO.

Now, the Court has become “intellectually emotional” about the government’s refusal to implement its 2009 judgment. In January, the Court enumerated six “unpleasant” options that it was weighing to address the government’s recalcitrance – ranging from outright disqualification of the President and Prime Minister for violating their oaths of office or the initiation of contempt proceedings against the Prime Minister, at one end of the spectrum, to leaving the matter in the hands of Parliament or the people, at the other. In between, the Court floated the idea creating a commission to monitor implementation of its order. The less severe options might have exposed the Court as incapable of fully enforcing its order. But as a practical matter, the Court faces that prospect anyway, since it seems likely that no matter what it does, there will be no effective effort to revive the proceedings in Switzerland before the applicable limitations period runs. In that light, perhaps avoiding the smackdown that is about to ensue would have been a good enough reason for the Court to exercise the passive virtues in this instance and instead move on, as human rights lawyer Asma Jahangir has suggested, to take up the “thousands of other pending cases” that will necessarily get put on the back burner because of this soap opera.

For its part, why won’t the government simply write the letter to Swiss officials and put this game of chicken to an end, as Jahangir also has urged? Formally, the government has argued that it cannot do so because now that he is President, Zardari is constitutionally immune from criminal prosecution. More likely, the move is simply calculated to protect Zardari from legal exposure – and to at least try to avoid the political hit that would result from going on record to request criminal charges against its own head of state and party co-chairman. At this point, however, as a practical matter that political hit may be hard to avoid no matter what happens.

So both the government and the Court appear to have staked out the most aggressive positions possible when it’s not entirely clear how much either side will gain in the end from doing so. And the NRO case is only one of several recent instances in which the Court has been clashing with the government over highly charged political issues – including the Court’s implicit invalidation of Parliament’s constitutional amendments to the judicial appointments process in 2010 and its current investigation into the so-called Memogate scandal, which has put the civilian government directly in the crosshairs of the military. While the Supreme Court during Chaudhry’s tenure has asserted its autonomy from the military, that has not by any means been the Court’s traditional approach – to the contrary, Pakistan’s superior judiciary has a much longer tradition of acquiescing and validating the military’s extraconstitutional moves to usurp power from civilian rulers.

Placed within that broader context, the Supreme Court’s recent assertiveness raises other issues. In their simplest forms, discussions of “judicial independence” – which of course was the principle repeatedly invoked by the lawyers’ movement in 2007 – tend solely to consider the balance between the judiciary’s autonomy and accountability vis-à-vis the executive and legislature. As scholars have emphasized, however, a more complete understanding of judicial independence requires attention to that balance across a number of additional dimensions and axes. In Pakistan, that requires attention to the looming, shadowy presence of what Kamran Shafi refers to as the “Deep State” – the security establishment and its network of affiliated interests in the bureaucracy and private sector, which has played a dominant role in Pakistan’s politics, economy, and society under both military and civilian regimes. Indeed, the underlying discourse that has justified the Court’s aggressiveness in these recent cases – an aversion to “corrupt” and/or “incompetent” politicians in the NRO case, the imperative to protect Pakistan’s sovereignty and security from being undermined by those same politicians in the Memogate case – is entirely continuous with the discourse upon which the military’s own interventions have traditionally been justified. As Muneer Malik – one of the leaders of the lawyers’ movement in 2007 – said last week, “In the long run this is a very dangerous trend. . . . The judges are not elected representatives of the people and they are arrogating power to themselves as if they are the only sanctimonious institution in the country. All dictators fall prey to this psyche — that only we are clean, and capable of doing the right thing.”

Another lawyer active in the lawyers’ movement, Faisal Siddiqi, similarly argues that by setting themselves up as “arbitrators of democratic righteousness,” the Supreme Court judges are playing a dangerous game:

[W]hat are the consequences of the SC deciding the eligibility of politicians on the intellectually tenuous grounds of dishonesty or being ‘ameen’ or a violation of the latter’s oath? And of disqualifying prime ministers, removing presidents and ordering regime change on other grounds? This order signifies a possible transition from a judicially activist court to one that follows the jurisprudence of a legal empire. This new jurisprudence signifies that it is the SC which will determine what an honest/ameen democratic system should look like. . . .

This possible transition to a legal empire is based on the misleading presumption that the panacea for all major problems facing the democratic system lies in the laws and judicial system. Sadly, neither our history nor a comparative political analysis of other countries proves such a legally biased thesis.

What is required is a strong democratic constitutionalism determined by politics, the law and the legitimate use of force. Yes, action should be taken for contempt but no institution should presume a monopoly over democratic integrity and wisdom.

It is precisely because of the limitations of the law vis-à-vis democratic problem-solving that the judiciary should be self-critical and humble in its approach. [link]

The Court’s defenders respond by noting that even as it has challenged civilian politicians, it simultaneously has been standing up to Deep State interests as well. And indeed, in recent days the Court has moved forward on two sensitive cases involving the Inter-Services Intelligence Directorate. Still, many observers are skeptical that the Court will manage to be genuinely evenhanded in its treatment of civilian versus military interests over the longer term.

In the short term, as Omar Waraich notes, the “most immediate victim is likely to be the government’s ability to function”:

[T]he crisis will consume the energies of an already weak, unpopular and shaky government. As survival becomes a priority, other pressing concerns such as Pakistan's crucial fight against militancy, its faltering economy, and its desperate energy shortages will be neglected. [link]

And in the meantime, the Deep State can just bide its time. Pakistan has not been showing the military much political love in the last few years, but if Parliament and the Supreme Court continue to beat each other up, the military’s political fortunes could of course change rapidly – just as they did between 1971 and 1977. As Siddiqi warns:

It would be a constitutional tragedy if the path leading to the weakening of the present presidency and this PPP government also leads to the unintended consequence of the strengthening of the unconstitutional powers and role of the military establishment. If that happens, it will be of little constitutional significance as to who is to blame. [link]

However weak the military might seem on the surface right now, the Deep State’s tentacles run, well, deep. If Pakistan’s politicians and judges are unable to fashion a workable modus vivendi to consolidate democracy and constitutionalism, in the same spirit as the Charter of Democracy, there’s certainly no guarantee that the country won’t eventually find itself caught in a bad romance with military rulers once again.

Monday, February 13, 2012

Last week I expressed skepticism about the validity of the distinction between failure-to-give and taking-away that Judge Reinhardt's opinion draws in Perry v. Brown. I explained that while I understood the motivation of attempting to invalidate Prop 8 on California-only grounds, I didn't think the distinction should make much of a difference in the context in which it was invoked -- except perhaps as a piece of evidence in a case attempting to show that Prop 8 was motivated by "animus" in violation of Romer v. Evans. Similar skepticism has since been expressed by others who share my general view that there ought to be a constitutional right to same-sex marriage. For a nice overview of the issue in political context, see David Cole's essay in the NY Review of Books.

But to say that the failure-to-give/taking-away distinction should not cut much ice in the Prop 8 case is not to deny that it is important in other contexts. Here I want to ask more generally: When does and should the distinction between failure-to-give and taking-away matter in the law? I have three examples in mind but I'd be very interested in additional suggestions from readers.

1) The most fundamental use of the failure-to-give/taking-away distinction in law tracks the act/omission distinction in deontological accounts of morality. Tort law and criminal law provide the most familiar examples. Tort law and criminal law impose very severe prices and penalties, respectively, for deliberately taking away someone's life, health or safety. By contrast, under the law of most American jurisdictions, there is no general duty to rescue a stranger, even if the rescue would cost the rescuer virtually nothing. Even those jurisdictions that impose Good Samaritan obligations punish failure to comply with such obligations much more leniently than they punish intentional deprivations.

2) State action doctrine in constitutional law utilizes the failure-to-give/taking-away distinction in much the same way as tort law and criminal law. Thus, in the DeShaney case the Supreme Court says that while the Due Process Clause forbids the government from depriving people of liberty (or life or property) without due process, government generally has no obligation to give people protection for their liberty (or life or property) against private deprivations. That is a natural (though not inevitable) reading of the language of the Due Process Clause and it extends more broadly to the Court's rights jurisprudence: Rights are rights against deprivations, not rights to assistance.

3) The Takings Clause of the Fifth Amendment embodies a more particularized failure-to-give/taking-away distinction. Suppose that a state had a longstanding common-law property rule making clear that certain categories of beachfront property could not be developed. The State would then be under no obligation to give development permission to any particular owner of a parcel of such beachfront property. However, if the background property rule included a right to develop, then a new regulation denying the beachfront property owner the right to develop could constitute a regulatory taking requiring just compensation. So holds the Lucas case.

Interestingly, none of the foregoing examples necessarily relies on the endowment effect as such. (The endowment effect means that people value things more highly if they already have those things than than if they do not). The normative force of the Takings Clause does not rely on the endowment effect because it only requires the payment of fair market value as just compensation, whereas compensation for the full value of loss might be higher.

In any event, I'd be interested in other instances in which the law already does and/or should draw the failure-to-give/taking-away distinction.

Sunday, February 12, 2012

What is the cause of the political imbroglio over President Obama's decision (and then re-evaluation) regarding the obligation of Catholic-affiliated institutions to provide health insurance covering contraception? Surely one explanation lies in the peculiar compromise that is the American employment-based health insurance system.

If our system were designed along wholly free-market lines, then health care and health insurance would be purchased in a private market from private funds. Under such circumstances, an employee of a Catholic hospital would be free to spend some fraction of her take-home pay to purchase birth control pills or to pay a premium for a health insurance policy that covers birth control pills, just as she would be free to spend some fraction of her take-home pay making other purchases that the Catholic Church regards as immoral--contributing to pro-death-penalty candidates, for example.

At the other end, if we had a system of public health insurance in which the government either provided health care (as in the UK) or paid mostly private health care providers (as in France), then employers also would not be involved in the delivery of health care, and so would have no occasion to complain that they were being dragooned into participating in the provision of a good or service that they regard as immoral. Accordingly, the current mess largely arises out of the peculiar, path-dependent compromise of employer-based health insurance.

That observation does not lessen the force (whatever it is) of the objection voiced by the Catholic bishops and (to a lesser extent) other Catholic institutions. The truth is we do have employer-based health insurance and so they are being required to participate in activity they regard as immoral.

But I wonder whether the force of the objection is at all diminished by the positions that we could expect the Catholic Church to take in the hypothetical world in which we had a different method for providing health insurance. A great many Catholics favored extending health insurance to the uninsured during the debate over the bill that became the Patient Protection and Affordable Care Act. But religious Catholics also objected to having insurance listed on the new exchanges cover abortion and to a lesser extent, contraception. More broadly, the Church's position is not simply that contraception and abortion are wrong for Catholics; the Church position is that they are wrong for everyone, and insofar as it can build political coalitions with other socially conservative actors, is willing to use the power of the state to enforce that view on others. As Rick Santorum's statements show, the view on contraception is an outlier, whereas the view on abortion is more mainstream. But the important point is that the Church probably would impose its views on everybody if it could.

There's nothing inherently wrong with that. If one thought that the Church's views about contraception were correct, then one would probably welcome it into a political coalition. There was nothing wrong, and everything right, about the way that religious opposition to slavery was a crucial factor in ending slavery.

However, in thinking about claims for conscientious objection, it may be useful to keep in mind whether the claimant is asking for a right to be different on the ground that everyone should be able to be pursue his, her or its own path, or whether the claimant really wants to control everyone else and is simply asking for an accommodation as a decidedly second-best option. Keeping that distinction in mind, it's hard to think about these claims without placing some substantial weight on the merits of the position. An objection to funding contraception thus looks much less compelling than an objection to funding slavery, say. Whether one ought to try to bracket one's views about the underlying objection presents an important question that I'll simply notice for now.